Correlation Between BOS Better and GROUP

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Can any of the company-specific risk be diversified away by investing in both BOS Better and GROUP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BOS Better and GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOS Better Online and GROUP 1 AUTOMOTIVE, you can compare the effects of market volatilities on BOS Better and GROUP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BOS Better with a short position of GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and GROUP.

Diversification Opportunities for BOS Better and GROUP

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BOS and GROUP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and GROUP 1 AUTOMOTIVE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GROUP 1 AUTOMOTIVE and BOS Better is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BOS Better Online are associated (or correlated) with GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GROUP 1 AUTOMOTIVE has no effect on the direction of BOS Better i.e., BOS Better and GROUP go up and down completely randomly.

Pair Corralation between BOS Better and GROUP

Given the investment horizon of 90 days BOS Better Online is expected to generate 3.76 times more return on investment than GROUP. However, BOS Better is 3.76 times more volatile than GROUP 1 AUTOMOTIVE. It trades about 0.06 of its potential returns per unit of risk. GROUP 1 AUTOMOTIVE is currently generating about 0.01 per unit of risk. If you would invest  278.00  in BOS Better Online on August 25, 2024 and sell it today you would earn a total of  57.00  from holding BOS Better Online or generate 20.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.74%
ValuesDaily Returns

BOS Better Online  vs.  GROUP 1 AUTOMOTIVE

 Performance 
       Timeline  
BOS Better Online 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.
GROUP 1 AUTOMOTIVE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GROUP 1 AUTOMOTIVE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GROUP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BOS Better and GROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BOS Better and GROUP

The main advantage of trading using opposite BOS Better and GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better position performs unexpectedly, GROUP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GROUP will offset losses from the drop in GROUP's long position.
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The idea behind BOS Better Online and GROUP 1 AUTOMOTIVE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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